Inside Florida's 'Tax Revolt'

Florida. The Sunshine State. America's own tropical delight — beautiful people with even more beautiful homes. But if you look behind that postcard image, you may find real trouble brewing in paradise.

In Florida, a storm is gathering over the state's soaring property taxes.

"If you have a significant difference between how much your taxes are going up and how much your income is going up, that is going to create a crisis very fast," said Marco Rubio, the state's young and ambitious speaker of the house. Over lunch with constituents in Miami, Rubio received an earful of complaints.

"I'm going to be working, I figure, 'til I'm 75 to pay my taxes," said Carol Kahn, a retired teacher.

Another constituent, Ignacio Mendez, said, "My tax base has gone up three times. I used to pay $4,000 and now I'm paying $12,000 a year in taxes."

And that, in a nutshell, is the crisis that now dominates the conversation in Florida. And drives the political career of Rubio, a 35-year-old Republican.

"It's the biggest issue in the state," he explained. "Usually people come to Florida to run away from the hassles, the cost of living of where they were from. And now they're telling us, 'You know, this is starting to look like the place that I came here to get away from,' and that's not the kind of talk we want to hear."

'Impossible to Move'

This problem is not unique to the Sunshine State. Tax protests are popping up in Michigan, Minnesota and Virginia, and testimonials from agitated homeowners are flooding the Internet.

But property owners in Florida — a state with no income tax — have been particularly hard hit.
Tax assessors base their judgments on real estate values, and in Florida, in just the last three years, property taxes have shot up about 50 percent statewide as home prices have jumped.

Lori Parrish, the Broward County property appraiser, said that she has never seen taxpayers so angry. "I think the citizens are about to revolt in a way that you've never seen," she said. "[They are] fed up. And I think fed up with government spending in general — you can't outspend the public's ability to pay."

Those higher tax bills have left thousands of middle-class families financially trapped in their current homes.

"We bought our house 11 years ago," said Evan Feldman, who would like to trade up for the sake of his growing family, "and it's usually your starter house, you never think it's the house you could be in for 25, 30 years."

"It's a three bedroom house and we'd like to have a second child," said Laurie Feldman, Evan's wife, "and with the taxes, it makes it almost impossible to move."

The Feldmans said they feel trapped because, like all permanent Florida residents, their home property tax bills are capped to avoid dramatic increases. But only if they stay put.
"We're not asking to go from something that's 1,600 square feet to something that's 3, 4, 5,000 square feet," said Evan. "These are people like myself that are looking for a couple of hundred square feet more, and they do feel trapped."

Middle Class Pushed Out

In Florida, a new owner of a home could easily pay three times more in property taxes than the owner of an identical home next door, who has lived there for several years.

"Soon, the only people who are going to be living here are the millionaires because the middle class are being pushed out," said Feldman. "The first time home buyers, pushed out. Retirees that want to downsize can't."

The higher taxes have their roots in a real estate market that began booming in 2004.

"Our sales prices for properties in 2004 to 2005 skyrocketed," said Parrish. "I mean there were bidding wars to pay more by buyers than the sellers were asking."

Then came the hurricanes. "Katrina came in the fall of 2005 and that slowed it back and then Wilma hit in October 2005 and devastated south Florida and Broward county," said Parrish. "People as far as 20 miles from the ocean had lost their roofs, fences — all sorts of damage."

All of a sudden, property owners were facing a double whammy: high taxes and higher insurance payments.

"The first insurance renewal premiums after Wilma skyrocketed…tripled, doubled, quadrupled. Scared people…" said Parrish. "The tax bills that people received in 2005 and 2006 were astronomical."

Hitting Bottom

After the hurricanes, the market cooled off quickly, and in Miami, a glut of unsold condominiums hangs over the city like a dark cloud.

"Yes, the real estate market was devastated," said Parrish. "Absolutely, the market was devastated, it hit bottom."

Now, the stalled real estate sales are also dragging down businesses that depend on housing just as their property tax bills have also shot through the roof.

All this has led Florida legislators like Rubio to consider radical changes. "I think the property tax is a horrible way to tax people," he said.

Rubio proposes eliminating the property tax and replacing it with a higher sales tax, an idea that ran into trouble when Democrats argued it would give the biggest breaks to the wealthiest homeowners.

Across Florida, local governments like the city of Delray Beach in Palm Beach County that have been raking in big bucks are now bracing for big budget cuts.

"I'm not saying we can't do without any of it," said David Harden, Delray Beach's city manager. "Think about your own family situation. How would you manage if your income suddenly dropped by 25 percent."

Some Cities Threaten Pushback

The city has already published a "hit list" of services it is threatening to reduce or eliminate if property taxes are cut back. That list includes nearly two dozen cops, fire station cutbacks, a brand new library, swimming pools, and even lifeguards at the beach. Rubio said he doesn't endorse these actions.

"That would be like my wife saying we're going to cut diapers and baby formula if I were to get a pay cut yesterday. Those are the last things you cut. And it shows what's wrong with the system," he said.

But would the Feldman family be willing to accept fewer services, poorer schools, or fewer firemen in exchange for lower taxes?

"Well, I don't know if our school systems could get any poorer," said Laurie Feldman. "And I have to ask the government, 'Where are all those tax dollars going?' A lot of my friends and neighbors are moving, reluctantly, to other states when they would prefer to stay here. And they can't afford it."

So, one way or another, the costs of living in paradise are going up. The painful choices ahead point to a showdown in the Sunshine State. And the bigger question is how far the tax revolt now under way there may spread.